Opinion: What the Supreme Court Ruling on the Impact Assessment Act Can Mean for Canadian Resources and Energy

In a critical decision that has sent shockwaves through the Canadian policy world for more than a week, the Supreme Court of Canada has ruled that the majority of Bill C-69, also known as the Impact Assessment Act, is largely unconstitutional.

This comes after a lengthy battle between multiple provincial governments and the federal government and it will certainly mark a significant turning point for the future of the Canadian energy sectors. 

What is the Impact Assessment Act?

Introduced in 2019, formerly known as “The modernization of the National Energy Board and Canadian Environmental Assessment Agency” act, the bill aims to modernize the country’s approach to regulating major resource and infrastructure projects, focusing on natural resources and energy projects. 

It was made to replace the National Energy Board Act with the Canadian Energy Regulator (CER) Act.

Here, we will look at two ways this flawed bill has impacted the Canadian economy, environment, and energy sectors, as well as what the future might look like. 

Delays, Delays, Delays

The Bill C-69 has introduced a more complex and uncertain project approval process. It made it more difficult for projects to receive approval and be allowed to begin. 

The Fraser Institute explained, when the bill first saw light, that “part of the problem with current environmental assessments is that they take too long.”

“It’s hard to see how adding a new phase of consultation at the front end will reduce the timelines,” they explain.

Why is this an issue?

Canada has some of the cleanest, most ethical and responsible practices in the world when it comes to our energy and natural resources industry. By not being able to fully develop our own resources, we have become more and more dependent on foreign countries to receive our energy. 

Delaying projects creates uncertainty for Canadians, increasing the risks. Currently, 40% of Canada’s refinery needs are met by imports. In 2020, as per federal statistics, 13% of Canada’s oil imports came from Saudi Arabia, and 4% came from Nigeria. 

Investors, Stay Out!

Bill C-69 broadens the scope of impact assessments to include not only environmental factors but also social and economic considerations. 

The new broadened scope can be used to delay or block projects based on arbitrary criteria, making it challenging for businesses to plan and invest in long-term projects.

While these criteria may seem important to achieve the priorities of the current federal government, they also bring two aspects to the decision-making: Subjectivity and uncertainty. And what are two words investors hate? Subjectivity and uncertainty. 

Former president and CEO of the Canadian Association of Petroleum Producers, Tim McMillan, conveyed a similar message when the bill first came out. He stated that ““The impact of a flawed Bill C-69 goes well beyond hurting Canada’s oil and natural gas industry. Every Canadian will be hurt by driving investment out of the country and preventing important nation-building projects from being developed.”

Alberta Premier Danielle Smith, in her first media appearance after the decision, said that it is her belief that many projects were never able to see light sorely due to the uncertainty and conditions imposed by the bill. 

Ontario Premier Doug Ford also applauded the justices for the decision. “We welcome today’s decision that confirms what we’ve been saying all along,” he stated. “The federal impact assessment process needlessly duplicated Ontario’s rigorous and world-leading environmental assessment requirements.”

Saskatchewan Premier echoed his counterparts’ comments. “This should cause the federal government to rethink the many other areas where it is overstepping its constitutional competence, like electrical generation and oil and gas production,” he said.

The Future Looks Bright

Advocates for provincial autonomy and defendants of Canada’s energy sectors have celebrated the decision, conveying that it will be a safeguard for provincial interests and economic growth. 

The Alberta government argued that the ruling will ensure a more balanced approach between federal and provincial governments when it comes to project assessment and approval.

Chris Gardner, ICBA B.C., and Mike Martens, ICBA Alberta, and Catherine Brownlee, Alberta Enterprise Group expressed their excitement very simply:

“Embracing innovation, making timely decisions, and fostering investor confidence are the hallmarks of successful national economies around the world.”

“This Supreme Court decision is the first step in reversing course and focusing on attracting investment, creating opportunities, and capitalizing on the potential of Canada,” they added.

On October 26, Minister Steven Guillbeault released a statement regarding the decision. He stated that “the Government of Canada is setting a clear path forward for impact assessments in Canada to provide clarity for businesses, provinces, Indigenous groups and stakeholders involved in the development of major projects.” (No need to quote since that’s from the press release we got via email) He added that “the Minister’s discretionary authorities to designate projects will be paused,” and that consideration for new projects will only continue once the “amended legislation is in force.” 

While it is still uncertain what changes will be made by the federal government regarding the act, this is a huge win for the Canadian energy sectors.

 

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